Steel Restraints Not Working Administration Seen As Lagging On Import Cut

August 19, 1985|The New York Times

The Reagan administration has failed to reduce steel imports, industry executives said last week, despite a pledge made 11 months ago to do so. Howevermany said that they expected improved figures for the second half of this year.

Last September President Reagan said he would seek to negotiate with foreign steel producers a five-year agreement to voluntarily limit their exports of finished steel products to the United States to an annual 18.5 percent of the domestic market. Semi-finished steel slabs from abroad were allotted another 1.7 percent of the domestic market.

The American Iron and Steel Institute said last week that for the first half of the year, steel imports had actually risen to about 13 million tons, or 26.2 percent of the supply in the domestic market, compared with about 12.5 million tons, or 24.2 percent of the market, for the same 1984 period.

Clayton K. Yeutter, the U.S. trade representative, told Sen. John Heinz, R-Pa., chairman of the Senate Steel Caucus, in a letter released Friday that a panel would be appointed to study problems that have arisen with Reagan's program. He said that despite the surge in imports in the first half of the year, "We finally have a program that should work and I expect to see results within a few months."

Yeutter's letter was in response to a May 28 letter from Heinz to Reagan in which the senator said that the steel program "is not working as effectively as had been hoped."

Donald H. Trautlein, chairman of the Bethlehem Steel Corp. and the steel institute, said on Friday that the steel industry appreciated the efforts that the administration has made. But he added, "Imports to date remain unacceptably high and there are few indications in our order book that would lead us to believe that the availability of imports is about to drop dramatically. We hope the government is right."

John E. Jacobson, a steel analyst with Chase Econometrics, said that "the surge in June import figures to close to 30 percent of the market was alarming." However, he said he believed imports for the remainder of the year would decline from the first half - making prospects for U.S. mills much brighter for the remainder of this year. "We think that steel imports will be at or below 10 million tons for the second half," he said. Last year, imports totaled 26.2 million tons.

The 18.5 percent target of the president's plan won't be met precisely, but it will have a "restraining effect" this year, Jacobson said.

The government has negotiated agreements, under the president's plan, with 14 steel-exporting nations, including Japan, Brazil, Mexico, South Africa, Spain and South Korea. The bilateral agreements cover 81 percent of steel imports into the United States, according to Joseph Spetrini, a compliance officer with the International Trade Administration of the Commerce Department.

Charles H. Blum, assistant U.S. trade representative for industrial trade policy, agreed with Jacobson's assessment that imports would drop in the second half. "Every report we have from the 14 countries with which we now have agreements indicates that their exports will be substantially reduced," he said.

Even representatives of steel importers agree that for the first six months of the president's program, which began last Oct. 1, uncertainties about quota limits and product categories encouraged foreign companies to "front-load" their steel shipments, that is, ship the bulk of their expected quota early in the year.

Fernand Lamesch, a steel importer and president of the American Institute for Imported Steel, acknowledges that with the "quota talk" surrounding the president's plan last year, some foreign producers enjoyed a "fool's freedom" and increased shipments.

"They thought that they couldn't lose by slightly overdoing it," hesaid. "But over the longer term, the import numbers will come down. They have to. If they don't you don't get a license for future shipments."

He said the current high import figures reflect, in part, six-month-old transactions of U.S. customers with foreign steel producers.

"I'm not sure how much the statistics reflect reality," he said. "The fact is that there is little dynamic activity in the marketplace for imported steel today." Sales from foreign mills earmarked for delivery to U.S. customers have "slowed to a trickle," he added.

"I think you will see the numbers for July down dramatically; the president's program is working," Lamesch said.

Walter F. Carter, a vice president and steel industry analyst with Data Resources Inc. in Lexington, Mass., said that 1985 is a "transition year" and the effectiveness of the president's program will not be known until next year.

The European Economic Community, which has a separate agreement limiting steel exports dating back to 1982, and Japan, both have allotments of about 5 1/2 percent each of the U.S. market. Canada, which does not have a formal agreement, supplies about 3 percent of the U.S. market.